As a business owner, it is important to understand that a small business certification can allow you compete for government contracts. Even during a recession, the government must continue spending to fund its operations and stimulate growth.
If you’re a small disadvantaged business you could be missing out on a lesser-known revenue stream – “set-aside” contracts. Government agencies, along with corporations who do business with the government, are mandated by law or corporate policies to spend approximately 20% of their budget with small disadvantaged companies.
Many federal, state, and city, contracts for certified small businesses that go unclaimed because businesses do not know how to be recognized as a certified business. Certification is a review process designed by certifying agencies to ensure that a small business is actually owned, controlled, and operated by applicant(s) that demonstrate they are under served group such as women, minorities, or veterans.
To prove control of a business the majority owner should meet specific criteria such as owning 51% or more of the company, having the highest title, being the highest paid, holding all licenses needed to provide firm services, and working full-time for the applicant firm during normal business hours.
If you are seeking small business certification, it is important to decide who your target customer is to see which certification is best for you.
The Three Most Common Small Business Certification Types Include:
Small business certifications to receive special treatment when bidding on contracts with federal agencies reviewed by the Small Business Administration. Examples include:
- 8(a) Business Development Program
- Women-Owned Small Business (WOSB)
- Economically Disadvantaged Women-Owned Small Business (EDWOSB)
Third Party Certifications
Small business certifications reviewed by non-government networks that are beneficial to receiving special treatment when bidding on contracts with large commercial businesses. Examples include:
- Women’s Business Enterprise National Council (WBENC)
- National Minority Supplier Diversity Council (NMSDC)
Small business certifications to receive special treatment when bidding on contracts with local government contracts. Examples include:
- Minority Business Enterprise (MBE)
- Women Business Enterprise (WBE)
- Disadvantaged Business Enterprise (DBE)
For more information on small business certifications check out our post: Which Business Certification Is Right For You?
If you are not sure if you qualify for a small business certification, contact us today!